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CCA 09/14/2015 CONFERENCE City of Fridley Conference Meeting Agenda September 14, 2015 5:00 p.m. 1. Budget Review a. Preliminary Tax Levy b. General Fund c. Utility Rate Analysis 2. Final 2016-2020 CIP Review � ��o�vvuM � FINANCE DEPARTMENT «�y DARIN R NELSON CITY OF FRIDLEY � Fn� FINANCE DIRECTOR To: Wally Wysopal, City Manager � From: Darin Nelson, Finance Director Date: September 10, 2015 RE: 2016 Preliminary Budget & Levy Talking Points Below are my budget talking points for our September 14"' budget meeting with the Council. A PowerPoint presentation will also be presented with additional detail at the meeting. Tax Levy—The charter restricts our 2016 levy to an operational increase of 1.4 percent, which amounts to $146,200. Given the relativeiy smali percentage increase, we are going to be required to levy the full allowable increase in order to maintain existing operational service levels. Offsetting this increase is the fact that a debt service payment is expiring this upcoming year. That debt service payment would reduce the levy by$172,000, which wouid result in a net reduction to the total levy. As I mentioned to the Council in August, staff is proposing to prepay the debt service payments on finro outstanding street improvement bonds. Prepaying these bonds will save almost $40,000 in interest � expense over the next finro years and allows the City the opportunity to better position itself for a potential facility bond in the future. This proposal would increase the total levy by$466,228 or 3.97 percent. The financial impact to residents is expected to be less than $5 for a home with an estimated market value of approximately$215,000, mainly due to the shift in valuation changes from residential to commercial. Below is a three year levy comparison befinreen the actual levies for 2014 and 2015 and the proposed 2016 levy. Prelirrunary Percent 2014 2015 2016 Change General Fund $ 10,053,992 $ 10,391,563 $ 10,537,745 1.41% Capital Equipment Fund 175,000 - - 0.00% 1.S. Capital Projects Fund - �� •�% Springbrook Nature Center Fund 339,300 345,882 350,724 1.40% Debt Ser'vice _ 942 99G 947,162 1,262, 33.28% Tota/Tax Levy $ !l,511288 $ 11,T34,6Q7 $ 12,200,�5 3.9T% General Fund Changes — Personnel costs have been developed with a 2.0 percent COLA increase. Health insurance had initially been calculated at a 15 percent increase. Our health insurance contract is up at the end of this year so our broker went out to the market for bids which successfully brought in a zero percent increase for 2016 with our same provider. This is definitely good news as the original 15% health insurance increase would have cost the General Fund about $120,000 or basically all of our operational levy increase. Several positions have turned over in the last two years. These newer employees are often replacing retiring or long tenured employees were at the top of their pay scales. New employees are typically coming in at a lower wage but are eligible for step increases which accounts for an additional two percent of our salary increases. 2016 is a presidential election year. An additional $55,000 is budgeted in personnel costs to cover the cost of election judges. No new positions are planned for the 2016 General Fund. The most substantial change to the General Fund is that there is a need to allocate a portion of the City's LGA to the General Fund. The staff and Council have a made a concerted effort over the last several years to dedicate all LGA to capital projects. This was a conscious decision so that in the event LGA experiences a last minute reduction it would be easier to adjust current or future one-time purchases rather than on-going operations. The City's 2016 certified LGA is $1.35 million, an increase of$34,500 over 2015. I have reviewed the CIP and the Building Capital Projects fund has about $1.25 million in projects that are either on hold or planned over the next several years that would not be needed if a new facility is constructed. This would cover the use of $250,000 of LGA funds over the next five years. Even with this shifting of LGA funds to the Generat Fund, staff is anticipating utilizing I some excess fund balance to balance the 2016 budget. As of December 31, 2014, the City had a fund balance equaling 55 percent of the 2015 budgeted expenditures. The General Fund's budget policy indicates a balance in the range of 35 to 50 percent. The current balance of 55 percent equates to about $750,000 of surplus fund balance. So there are funds available to support operations, but excess fund balance doesn't solve on-going funding issues and the percentage will actually fall if balanced budget is achieved. Since expenditures tend to increase year over year, maintaining a certain fund balance percentage requires an annual surplus. That being said, the City does have a very healthy fund balance within its General Fund and should not be overly alarmed that the budget utilizes some of the surplus. I have attached a 2016 Preliminary General Fund Budget that provides an overview of the �ast several years along with the budget for 2015 and the proposed preliminary budget for 2016. This budget also indicates the City's fund balance levels over these same years. See exhibit 1. Utilities — I have included the performas for each of the utilities along with annual household cost comparisons; see exhibit 2 thru 6. Water Utility Fund —2014 was the third year of consecutive 8 percent increases. The 2015 rate was reduced to a 5 percent increase. We increased rates in 2012 thru 2014 at a higher rate in an effort to "catch up" with our growing costs, specifically capital � costs. These rate increases have helped somewhat stem the tide given the fact we have not had to issue debt since 2010 in the water fund. Due to the recent wet springs and summers, and potentially other factors, such as an aging and more diverse population, we are experiencing a decline in water sales. This decline in sales has significantly mitigated our previously projected revenue. Water sales have declined almost 15 percent since 2012. Prior assumptions were based these higher consumption amounts which has a detrimental effect on our cash reserves even with our increased rates. To put this decreased consumption in a different light, Met Council is recommending residential consumption at a conservative rate of 75 gallons per person per day, which many cities are well above. Fridley's residential consumption for 2014 is calculated at about 65 gallons per day. In addition to decreasing revenue, water production expenses are anticipated to increase by 10 percent or about $80,000 per year due to stopping the flow of water from New Brighton. The City's utility's infrastructure has substantial fixed costs in just providing access to service for our residents and businesses. Having a rate structure that is so heavily dependent upon variable consumption levels is problematic. The Public Works Director and myself have been discussing the need for a utility rate analysis and potential rate restructuring. Unfortunately, a study of this nature would not be complete until well after our budget preparation cycle is complete. I have also included a graph that compares our 2012 projections with our 2016 projections. This graph points to the fact that water consumption is a major variable in estimating yearly revenues. Staff is recommending a 15 percent increase in water rates for this upcoming year. Ideally it would be nice to moderate the rate increase in lieu of a rate study, but unfortunately our cash reserves can't afford a year delay and would likely cause future rate increase to be compounded even further. A 15 percent increase equates to approximately $27 annually for average residential water user. Sewer Fund —As expected with a decrease in water sales our gallons billed for sewer also decreased in 2014. Met Council Environmental Services (MCES) measured our flow for the year at 1.68 billion gallons which is a decrease of 4.8 percent over the prior year. MCES reports a system wide flow of 6.4 percent for the year. MCES's costs are allocated based on each city's contributions to the system, and since our flows didn't decrease at the same rate as the entire system, we will be absorbing a larger portion of the bill for this upcoming year. In addition, MCES base charge is increasing 5.4 percent so with our added share of the pie our MCES charges are increasing by 7.2 percent. MCES has provided us with notice that 5 percent plus increases can be expected for the next few years as their infrastructure continues to age and is in need of repair and replacement. The MCES charge accounts for almost 80 percent of the entire Sewer operation budget. Here again this utility has major operating and infrastructure costs just to maintain the service no matter how much or how little flow passes through our system. Does it make sense to reply so heavily on variable charges? As mentioned earlier, Jim Kosluchar and myself are thinking a rate study with a potential rate restructuring is a real need. To offset increasing MCES charges along with future higher increases staff is ` recommending a rate increase of 9% which equates to an annual increase of$35.36 for the average household. Storm Water—This fund is now bearing its share of the weight by having staff allocated to the operational costs, which was done this past year. This fund also experienced a large rate increase this past year helping to stabilize the fund's cash balance. In addition, as part of the cleanup process of implementing a new utility billing system all parcels within the City were reviewed to ensure the correct acreage and rate were being applied. This process had not been thoroughly reviewed since the storm water fee was first implemented. Staff did find several unbilled parcels for various property owners. A vast majority of the discrepancies came in the form of multiple parcels for one owner with storm water not being charged to all the parcels. The corrections are now in place and additional annual revenue is anticipated to increase by approximately $125,000. Staff is recommending no rate increase for storm water for the upcoming year. Rate discussion will be the topic discussion for the evening. Capital Improvement Plan (CIP) I have included the updated CIP tables to this memo, see Tables I - X. A final CIP will be provided to the Council for approval on September 28. Differences between the preliminary and final CIP's include; updated tables for the utilities to mirror the perFormas and the reallocation of LGA from the Building Capital Projects Fund to the Generat Fund. Approving the CIP document doesn't authorize budget approval of the projects; it soley means the Council has adopted the plan. All 2016 projects will be included in the final budget for Council approval. Darin ' Attachments , Exhibit 1 CITY OF FRIDLEY 2016 PRELIMNARY GENERAL FUND BUDGET September 14, 2015 2012 2013 2014 2015 2016 % REVENUES Actual Actual Actual Budget Budget Change Taxes $ 9,641,495 $ 9,787,289 $ 10,111,332 $ 10,466,600 $ 10,612,800 1.4% Licenses&Permits 851,976 858,310 899,496 895,400 903,700 0.9% Intergovernmental 874,778 909,807 939,002 883,000 1,180,700 33.7% Charges For Services 1,972,076 2,079,417 2,090,271 1,902,000 1,978,200 4.0% Fines& Forfeitures 170,427 180,815 179,484 195,000 180,000 -7.7% , Special Assessments 39,851 30,765 19,080 27,200 19,400 -28.7°/a Miscellaneous 352,627 229,132 386,662 240,100 282,500 17.7% Other Financing Sources 600,000 641,000 672,865 569,600 532,900 -6.4% TOTAL REVENUES � 14,503,230 $ 14,716,535 $ 15,298,192 $ 15,178,900 a 15,690,200 3.4% EXPENDITURES Personnel Services $ 10,688,346 $ 11,098,822 $ 11,592,996 $ 11,589,600 $ 12,169,200 5.0% Supplies 785,405 961,727 919,592 888,800 888,800 0.0% Other Services &Charges 2,109,548 2,074,216 2,283,807 2,700,500 2,700,400 0.0% CapitalOutlaty 24,163 18,626 96,581 - - 0.0% Other Financing Uses - 145,052 175,000 - - 0.0% TOTAL EXPENDITURES $ . 13,607,462 a 14,298,443 � 15,067,976 � 15,178,900 a 15,758,400 3.8% � Beginning Fund Ba/ance 6,773,554 7,669,322 8,087,414 8,120,978 8,120,978 Ending Fund Balance $ 7,669,322 $ 8,087,414 $ 8,317,630 $ 8,120,978 $ 8,052,778 Fund Balance Percentage 54% 55% 55% 52% CITY OF FRIDLEY 6cFmbit 2 WATER FUND PROJECTIONS INCOME I EXPENSE PROJECTtONS 9/3I2015 Actual Actual Budget Estimated Budget Projected Projected Projected Projected 2013 2074 2075 2015 2016 2077 2018 2079 2020 Residential Rate(Quarterly 0-20,000) 1.38 1.49 1.57 1.57 1.80 2.08 2.14 2.20 2.27 Rate(Quarterly 20.001-40.000) 1.53 1.65 1.74 1.74 2.00 2.30 2.36 2.44 2.51 Rffie(Quarterty 40,001-60,000) 1.68 1.81 1.90 1.90 2:19 2.52 2.59 2.67 275 Rate(Quarterly 60.001-uNimited) 1.81 1.96 2.06 2.06 2.20 2.53 2.61 2.68 2.76 Rate Change Projections(%) 8.0% B.O�o 5.0% 5.0% 15.OX 15.0°k 3.0% 3.0°� 3.0% Gallons Sold(thousands) Actual Consumption(Quarterly 0-20.000) 246,328 237.064 239,456 237,064 237,064 237,064 237,064 237,064 237,064 Actual Consumption(Quarterly 20,001-40,000) 215,556 143,587 217,261 143,587 743,587 143,587 143,587 143,587 143,587 Actual Consumption(Quarterly 40,001-60,000) 57.348 54,870 69.864 54,870 54.870 54.870 54,870 54,870 54.870 Actual Consumptbn(Quarterly 60,001-unlimited) 241,804 232,558 237,343 232,558 232,558 232,558 232,558 232,558 232,558 Total Consumption 761,036 668,079 763,924 668,079 868,079 668,079 668,079 668,079 668,079 Commercfal Rate(Quarterly 0-40,000) 1.68 1.81 1.90 1.90 2.�9 2.52 2.59 2.67 2.75 Rate(Quarterly 40.001-250,000) 1.87 2.02 2.12 2.12 2.44 2.81 2.89 2.98 3.07 Rate(Quarterly 250,001-500,000) 2.08 225 2.36 2.36 2.72 3.12 3.22 3.31 3.41 Rate(Quarterly 500,001-7,000,000) 2.29 2.47 2.60 2.60 2.99 3.43 3.54 3.64 3.75 Rate(Quartedy 1,000,001-unlimited) 2.50 2.70 2.83 2.83 3.26 3.75 3.86 3.98 4.09 I Rate Change Projections(%) 8.0% 8.0% 5.0% 5.0% 15.0% 15.0% 3.0% 3.0% 3.0% Gallons Sold(thousands) Actual Corsumption(Quarterly 0-40,000) 14,788 13,265 14,960 13,265 13,265 73,265 13,265 13,265 13,265 Actual Consumption(Quarterly 40,001-250,000) 90,720 54.618 92,071 54,618 54:618 54,618 54,618 54.618 54,618 Adual Consumption(Quarterly 250,001-500.000) 49,264 30,048 53,205 30,048 30,048 30,048 30,048 30,048 30,048 Actual Corsumption(Quarterly 500,001-1,000,000) 29,780 32,998 38,541 32,998 32.998 32,996 32,998 32,998 32,998 Actual Coreumpcion(Quarterly 1,000.001-udimRed) 246,376 238,927 247,348 238,927 338;927 238,927 238,927 238,927 238,927 Total Consumptlon 430,928 369.856 446,125 369,856 369;856 369,856 369,856 369,856 369,856 Operating Revenues Water Sales(vdume based sales) 2.232,969 2,317,597 2,524,400 2,179,200 2,467.300 2,837,400 2,922,500 3,010,200 3,100,500 Foced Reverwe(8,456'13.25 per Customer'4 quarters) 414,300 448,200 469,759 469,759 540,223 621,256 639,894 659,090 678,863 Flat Rate Sales 394 2.043 10,200 10,200 10,200 10,200 70,200 10,200 10,200 Other Revenue 140,481 145,877 175,600 175,600 175.600 175,600 175,600 175,600 175,600 Total Opereting Revenues 2,788,744 2,913,717 3,179,959 2,834,759 : 3;�93,323 3,644,456 3,748,194 3,855,090 3,965,763 Estimated Expenditure Change(%) 0 2.0% 2.0% 2.0% 2.0% 2.0% Operating Expenses PersonalServices 833,781 801,182 909,413 909,413 927,609 946,153 965,076 984,378 1,004,065 Supplies 436,160 465,244 229,512 229,512 434.1D2 238,785 243,560 248,431 253,400 Other Services and Charges 566,336 715,739 857,525 857,525 962,143 981,386 1,001,013 1,021,034 1,041,454 Actual Depreciation(Base Year) 748,597 729.276 665,752 665,752 637,358 579,021 534,099 520,606 560,227 Change in Depreciation(Since Base Y�r) - 54,750 105,560 i81.710 293,070 375,203 433,837 442,514 Total Operating Expenses 2,604,874 2,711,441 2,716,952 2,767,762 2.942,914, 3,038,414 3,118,952 3,208,286 3,301,660 Operatinglncome 183,270 202,276 463,007 66,897 350,40$ 606,041 629,242 646,804 663,503 Non-Operffiing RevenueslExpenses IMerestlncome (30A36) 83,748 50.000 50,000 44.000 44.000 44.000 44,000 44.000 DeM Service(iMerest only) (210,712) (190,978) (179,498) (179.498) (159.699) (293,930) (262.086) (229,011) (309,648) GaiN(Loss)on Disposition of Fixed Assets ' " � Total Non-0perating RevenueslExpenaes 240,748) 107,230 (129,498) 129,498 115,699 249,930) 218,086 185,077 265,648 NstJncome' S7,4i8 ' 95.W6 333,`.� 6Z30f 134.709 358�112. d77,i56 951,793 397$55 Cash and Cash Equivalents January 1 3,417,592 3,271,777 4,844,784 3,271,177 2,419,988 3,848,765 2,576,968 4,017,425 3,618,662 Cash Flavs From Operatirg ActivRies: Operating Income(Loss) 463,007 66,997 250.408 606,041 629,242 646,804 663,503 Adjustmer�s to reconcde operating Income(Loss) to net cash flows from operating activities: peprecia�pn 720,502 771,312 819,068 872,091 909.302 954,443 1,002,741 Net cash flows from operoting activities - 1,783,509 838,309 7;U68,476 7,478,132 1,538,544 1,601,247 7,666,243 Cash flows from capital arxl related irnesting activities: AcquisRion and cortstruction of faed assets (1.030.000) (1.030,000) (3.342.400) (1,705,000) (�.955,000) (950,000) (550,000) Proceeds from sale of revenue bonds - - 4,372,400 - 2,905,000 - - Existing Debt-Principal paid on revenue bonds (530,000) (530,000) (555.000) (795,000) (830.000) (865,000) (810,000) Existing Debt-Irkerest and paying agerrt fees (179,498 (179,498) 159,699 (293,930) 262,086 (229,011 (309,648 Net cash flows from capital and related investing 1,739,498 1,739,498 315,307 2,793,930) 142.086 2,044.011 (1,669.648 Net cash flows from investing activities 50,000 50,000 44,000 44,000 44,000 44,000 44,000 Netlncrease(Decrease)in cash 505,989 (851,789 1,428,777 1,271,797) 1,440,458 (398,764 40,596 Cash and Cash Equivalents December 31 3,411,592 3,271.177 4,338,795 2,479,988 3,&18,765 2,576,968 4,017,425 3,618,662 3,659,258 Exhibit 3 Water Utility Fund Change in Yearly Utility Bill 2016 Rate Analysis Average 20,000 gallons per quarter or 80,000 gallons per year- Residential Only 2014 Rate Changes 2015 Rate Changes 2016 Rate Changes $ Change %Change � Change %Change a Change %Change 2014 PerYear PerYear 2015 PerYear PerYear 2015 PerYear Per Year Residential 172.48 12.78 8.00% 181.10 8.62 5.00% 208.27 27.17 15.00% Exhibit 4 CITY OF FRIDLEY SEWER FUND PROJECTIONS INCOME/EXPEN3E PROJECTIONS 09N0/15 Actual Actuai Budget EaNmated :�� ProJected ProJected Projected Projected 2013 2074 2015 2015 2017 2018 2079 2020 Gallona Diaposed per MCES (in milliona) 1,677 . 1,675 1,675 1,675 1,675 1,675 ,,1� Sewer Blllings Gallons Billed (In miltions) 978 957 978 935 935 935 835 935 Gallona 8111ed Flat Rate(in mitlione) 52 39 21 21 27 y7 y� y� Rate(E per 1,000 gallons) 3.91 4.71 4.39 4.39 5.12 5.46 5.76 6.05 Rate Change Projections(%} 7.5% 5,0°h 7.0% 7.0% 7.0% 7.035 5.0% 5.0% Operating Revenuea SewerSales 3,962,823 4,785,358 4,297,000 4,105,000 4,792,000 5,127,000 5,384,000 5,653,000 Fixed Revenue(8,456'10.33 per Customer'4 quarters) 328,400 326,400 349,400 349,400 ` 407,505 436,031 457,832 480,�24 Flat Rate Sales 204,390 158,551 92,000 92,000 108,000 175,000 121,000 127,ppp Other Revenue 79,187 84,183 55,000 55,000 55,000 55,000 55,000 55,000 Total Operating Revenues 4,572,800 4,754,492 4,793,400 4,601,400 5,362,505 5,733,037 6,017,$32 6,375,724 Esiimated Expenditure Change(%) 0 +� "� � 2.0% 2.0% 2.0% 2.0% Estimated Expenditure Change MCES(%) 0 _ #: 5.0% 5.0% 3.0% 3.0% Operating Expensea g� �' � PersonalServices 724,656 759,360 512,739 512.700 � 533,454 544,123 555,005 566,105 Supp�ies 49,814 56,006 61,562 61,600 64,049 65,330 66,636 67,969 DisposalCharges 3,595,271 3,581,746 3,674,820 3,674,800 4,135,239 4,342,001 4,472,261 4,606,429 OtherServices and Charges 271,417 256,288 185,853 185,900 193,361 197,228 201,173 205,196 Actual Depreciatan(Base Year) 3t8.515 321,262 283,921 284,000 260,042 237.816 228,684 229,592 Change in Depreciation(Sfnce Base Year) 7,829 7,800 31,586 47,550 58,564 59,735 Total OperaHng Expenses 4,959,673 4,974,662 4,726,723 4,726,800 5,217,737 5,434,048 5,582,324 5,735,027 Operatinglncomel(Loas) 386,873 220,170 66,677 (125,400 144,775 298,983 435,509 580,697 Non-Operadng Revenues(Exps.) "��` IMerest Income-Net figure (10,810) 27,543 20,000 20,000 - 30,000 30,000 30,000 30,000 DeM Service(irderest onty) (14,854) (13,925) (13,400) (12,500) ; (11,600) (10,625) (9,575) (8,525) Gain(Loss)on disposition of faed assets - - - - ��' _ . _ _ Capital Grants(MCES) - 118,827 - _ r _ . . _ Operating Transfer In(Out) Total Non-Operating RevenuealExpansea 25,664 132,445 6,600 7,500 .' 18,400 19,375 20,425 27,475 Net Incoma 412;537 87,725: 73,277 717,900 ` 163.175 3f8;358 455,934 602.172 Cash and Cash Equivalents January 1 1,534,291 1,053,825 908,466 1,053,825 590,492 400,294 774,018 747,199 Cash Flaws From Operating AcNvRies: Operating Income(Loss) 66,677 [125,400) - 144,775 298,983 435,509 58Q697 Depreciatbn 291,750 291.800 291,628 285.366 287.248 289.327 Net cash flows from operatfng activfNes 358,427 166,400 436,403 584,349 722,757 870,024 Cash flows from capkal arxi related financing accivRies: Acquisition and constructbn of fixed assets (415,000) (790,000) (615,000) (195,000) (735,000) (350,000) GraM Proceeds _ _ _ _ _ Existing Debt-Principal paid on revenue bonds (30,000) (30,000) (30,000) (35,000) (35,000) (35,000) Existing Debt-IMerest and paying agent fees (13,400) (73,400 (11,600) 10,625 9,575 8,525) Net caah flowa from capital and related flnancing activitiea (458,400 (833,400 656,600) 240,625 (779,575 393,525 Net cash flowa from irweadng activities Z0,000 20,000 30,000 30,000 30,000 30,000 Netlncrease(Decrease)In cash 79,973 647,000 190,197) 373,724 26,818 506,499 Cash and Cash Equivalents December 31 1,534,291 1,053,825 828,493 4p6,825 400,294 774,018 747,199 1,253,698 Exhibit 5 Sanitary Sewer Utility Fund Change in Yearly Sewer Bill 2016 Rate Analysis Average 20,000 gallons per quarter or 80,000 gallons per year- Residential Only 2014 Rate Changes 2015 Rate Changes 2016 Rate Changes $ Change %Change $ Change %Change $ Change %Change 2014 Per Year Per Year 2015 Per Year Per Year 2016 Per Year Per Year Scenario 1 Residential $367.17 $ 17.48 5.0% $392.87 $ 25.70 7.0% $428.23 $ 35.36 9.0% Commercial Exhibit 6 CITY OP PRIDLEY STORM WATER FUND PROJECTIONS REVENUEI EXPENSE PROJECTIONS AND CASHFLOW 07/30115 Actual Actual Budget EsUmated Budget Projected Projected Projected Projected 2013 2074 2015 2015 2016 2017 2018 2079 2020 RateChangeProjections(%) 4% 4% 75% 75% 0% 2% 2% 2% 2% Residerdial Rate Per Lot(REF considered 1/3)Per Qtr 4.72 4.91 8.59 8.59 8.59 8.76 8.94 9.11 9.30 Commericial Rate Per Acre Per Quarter 14.16 14.72 25.77 25.77 25.77 26.28 26.81 27.34 27.89 Operating Revenues Storm WaterSales 577,189 687,570 7,021,529 1,100,000 1,021,500 7,042,000 1,063,000 1,084,000 1,106,000 Taxes 2,531 33,274 910 6,000 900 1,000 1,000 1,000 1,000 Other Revenue 34,099 12,117 21,685 16,000 21.700 22,000 22,000 22,000 22,000 i Irrtergoverrme�al Operating Grant 1,000 - - Total Operating Revenues 614,819 732,967 1,044,124 1,722,000 - 1,044,100 1,065,000 1,086,000 7,107,000 1,129,000 Estimated Expenditure Change(%) 0 2.00°h 2.00% 2.00% 2.00% 2.00% Operating Expenses Personal Serv'ices 245.200 250,100 444,187 444,300 553,200 564,300 575.600 587,100 598,800 Supplies 7,618 4,570 8,874 11,300 9,100 9,300 9.500 9.700 9,900 Other Services and Charges 88.298 96,860 61,740 65�500 63,000 64,300 65.600 66.900 66,200 Actual Depreciation(Base Year) 234,717 235,797 234,327 293,900 235,800 235,800 235,800 235,800 235,800 Change in Depreciation(Since Base Year) - 19,725 19,725 147,400 70,900 88,600 712,300 127.600 Total Operating Expenses 575,827 587,327 768,853 834,725 7,002,500 944,600 975,100 1y017,800 7,040,300 Opereting Income 38,992 145,634 275,272 287,275 41,600 120,400 710,900 95,200 88,700 Non-Operffiing Revenues(Exps.) I�ergovernmer6alrevenue 321,800 50,000 50.000 200.000 50,000 175.000 150.000 150,000 IrNerestlncome (15,408) 37,303 14,000 14,000 12,000 12.000 12,000 12,000 12,000 DebtService(i�terestoNY) (��,2�0> (�o,ssa> (�o,�ss� (�0,200> (s,aoo> (e.�oo) (�,soo) (�.200� (s,aoo) Special AssessmeMS Levied - - - - - � ' ' Gain(LOSS)On Psset Retirement - - - - - - - � Operating Transfer In(Out) - - - ' Total Non-Operating RevenueslExpenses 26,678 348,515 53,837 53,800 202,600 53,300 779,700 154,800 155.600 Netlncome 12,374 494,149 329,109 341,075 244,200 173,700 290,000 250,000 244,300 I Cash and Cash Equivalents January 1 7,465,017 1,427,487 1,028,355 1,427,487 1,020,424 871,824 1,007,261 1,071,649 1,799,786 Cash Fbws From Operating Activkies: Operating Income(Loss) 275.272 287,275 41,600 120,400 110,900 95,200 88,700 Adjustmerrts to reconcil�e Operating Income(Loss) to net cash flows from operating activities: Depreciation 254.052 313,625 377.200 306,700 324,400 348,100 363,400 Net cash flows from operating activities 529,324 600,900 418,800 427,100 435,300 443,300 452,100 Cash flows from capital and r�ated financing activities Acquisifan and construction of foced assets (460,000) (1,036,800) (745,000) (320,000) (525,000) (445.000) (500,000) Proceeds from sale of revenue bonds - - - - - ' Grarrt Proceeds 50.000 50,000 200,000 50,000 175,000 150,000 150,000 Debt-Principal paid on revenue bonds (25,000) (25,000) (25,000) (25,000) (25,000) (25,000) (25,000) DeM-IMerest and paying agent fees 10,163 10,163 (9,400 (8,663 (7,912) 7,163 6,413 Net cash flows from capMal and relateA flnancing act. 445,163) 7,027,963 579,400) (303,663 382,972 (327,163 381,413 Net cash flows from investing activities 14,000 14,000 12,000 12,000 12,000 72,000 12,000 Netlncrease(Decrease)in cash 98,161 (407,063 148,600 135,437 64,388 128.137 82,687 Cash and Cash Equivalents December 31 1,465,071 7,427,487 1,726,515 1,020,424 871,824 1,007,261 1,071,649 7,199,786 1,282,473 ' Table I Capital lmprovements Program 2016-2020 EXPENDITURES BY PROGRAM CATEGORY 8 METHOD OF FINANCING 2016 2017 2018 2019 2020 TOTAL Percent Expenditures Proaram Cateaorv Major Equipment $ 429,700 $ 880,200 $ 656,500 $ 671,000 $ 1,297,000 $ 3,934,400 11.9% Technology Improvements 285,800 196,700 266,400 286,700 196,700 1,232,300 3.7% Municipal Buildings 347,000 666,000 181,000 206,000 2,100,000 3,500,000 10.5% Parks Improvements 2,250,000 269,000 184,000 234,000 197,000 3,134,000 9.4% � Street Improvements 1,554,400 1,385,900 3,684,800 1,503,200 1,305,400 9,433,700 28.4% Storm Drainage Improvements 745,000 320,000 525,000 445,000 500,000 2,535,000 7.6% Water System Improvements 1,560,000 1,705,000 1,955,000 950,000 805,000 6,975,000 21.0% Sewer System Imp 100,000 615,000 195,000 735,000 365,000 2,010,000 6.1% Municipal Liquor Stores 400,000 25,000 - - - 425,000 1.3% Total Expenditures By Program $ 7,671,900 a 6,062,800 $ 7,647,700 S 5,030,900 � 6,766,100 $ 33,179,400 100.0% Method of Financing Property Taxes $ 50,000 $ 50,000 $ 50,000 $ 75,000 $ 100,000 $ 325,000 0.9% Local GovernmentAid 1,100,000 1,100,000 1,100,000 1,100,000 1,100,000 5,500,000 14.5% Municipal State Aid 686,800 686,800 686,800 686,800 686,800 3,434,000 9.0% Federal HighwayAid 150,000 - 2,000,000 - - 2,150,000 5.7°/a Grants 200,000 50,000 175,000 - - 425,000 1.1% User Fees(External&Internal) 2,855,000 2,715,000 2,725,000 2,205,000 1,770,000 12,270,000 32.2% Park Dedication Fees 5,000 5,000 5,000 5,000 5,000 25,000 0.1% Special Assessments 600,000 560,000 580,000 580,000 580,000 2,900,000 7.6% Interest on Investments 51,500 50,500 49,300 47,800 45,600 244,700 0.6% Auction Proceeds 30,000 30,000 30,000 30,000 30,000 150,000 0.4% Capital Improvement Bonds - - - - 2,100,000 2,100,000 5.5% Utility Improvement Bonds 4,372,400 - 2,905,000 - - 7,277,400 19.1% Transfers In(Liquor Proceeds) 250,000 250,000 250,000 250,000 250,000 1,250,000 3.3% _ TofalMethodofFinancing $ 10,350,700 $ 5,497,300 $ 10,556,100 $ 4,979,600 $ 6,667,400 a 38,051,100 100.0% 2- 1 Table II � CIP 2016-2020 CAPITAL EQUIPMENT FUND Funding Sources and Expenditure Projections New(*)or Replacement(✓) 2016 2017 2018 2019 2020 Unfunded Funding Sources Local Govemment Aid $ 925,000 $ 525,000 $ 525,000 $ 525,000 $ 525,000 - Liquor Store Proceeds(Transfer) 175,000 175,000 175,000 175,000 175,000 - Interest on Investments 7,500 7,500 7,500 7,500 7,500 - Auction Proceeds 30,000 30,000 30,000 30,000 30,000 - Tota/FundingSourees S 1,137,500 $ 737,500 $ 737,500 $ 737,500 S 737,500 a - Expenditures Police Police Squad/SUV/Pickup ✓ $ 188,000 $ 194,000 $ 200,000 $ 206,000 $ 212,000 Outdoor Waming Sirens ✓ 47,500 - - - - �, 800 MHz Radio Replacement ✓ 78,700 78,700 - - - Fire Fire Engine ✓ - - - - 650,000 Rescue Truck(s) ✓ - 94,000 75,000 - - Aerial Ladder PainURehab ✓ - - 80,000 - - 800 MHz Radio Replacement ✓ 61,500 61,500 61,500 - - SCBA Replacement ✓ - - - 250,000 - Public Works-Parks Division Mowers ✓ 15,000 22,000 26,000 - 45,000 Pickup Trucks ✓ 30,000 30,000 53,000 - 20,000 Dump Trucks with Plows ✓ - - 39,000 - - Skid loader � - - ' ' - Utility Vehicle for Plowing ✓ - 97,000 - - - Utility Vehicles and Equipment ✓ 9,000 169,000 89,000 25,000 10,000 Public Works-Streets Division Dump Trucks with Plows ✓ - - - 170,000 170,000 Heavy Equipment ✓ - - - 130,000 Paving Equipment ✓ - - 3,000 20,000 60,000 Utility Vehicles and Equipment ✓ 134,000 14,000 - - Community Development Mid-size Passenger VehiGe ✓ - - 16,000 - - Total Expenditures S 429,700 S 880,200 3 656,500 S 671,000 3 1,297,000 Surplus(deficiency)of funding sources over(under)expenditures $ 707,800 $ (142,700) $ 81,000 $ 66,500 $ (559,500) Estimated Beginning Fund Balance (14,056) 693,744 551,044 632,044 698,544 Estimated Ending Fund Balance 3 693,744 a 551,044 3 632,044 S 698,544 S 139,044 2-2 � Table IV CIP 2016-2020 Building Capital Improvements . Funding Sources and Expenditure Projections 2016 2017 2018 2019 2020 Unfunded Funding Sources Local Govemment Aid $ - $ 300,000 $ 300,000 $ 300,000 $ 300,000 Interest on Investments 7,500 7,500 7,500 10,000 10,000 Capital Improvement Bonds - - - - 2,100,000 Total Funding Sources $ 7,500 $ 307,500 $ 307,500 $ 310,000 $ 2,410,000 $ - Expenditures Municipa/Center Municipal Center Parking Ramp Repairs $ - $ - $ - $ 50,000 $ - Municipal Center HVAC Retrofit 25,000 25,000 50,000 30,000 - Municipal Center Site Analysis 75,000 - - - _ Municipal Center Electrical/Mechanical Repair - - - - 2,100,000 Municipai Center Exterior Repairs - - 100,000 100,000 - Gun Range Backstop Retrofit , 96,000 - - _ _ Municipal Center Lower Level Remodel '� � �' � � _ _ _ Workstation Replacements/Repairs 20,000 20,000 20,000 20,000 - Storage,Cabinets, Fixtures 6,000 6,000 6,000 6,000 - Municipai Center Campus Renovation - - - - - 14,150,000 Public Works Public Works Storage Yard&Drainage Retrofits - 85,000 - - _ Public Works Campus Renovation(phases 1-2) - - - - - 7,000,000 Communify Center Fumiture&Fixtures 5,000 5,000 5,000 - - Fire Stations Fire Station 3 Building Repairs - 25,000 - - _ Floor Resurfacing-All Stations 25,000 - - _ _ Fire Station 1 Kitchen Improvements 15,000 - - _ _ Propane Fire Simulator - 100,000 - - _ Tota/Expenditures $ 347,000 $ 666,000 $ f81,000 $ 206,000 $ 2,100,000 $21,150,000 Surplus(deficiency)of funding sources over(under)expenditures $ (339,500) $ (358,500) $ 126,500 $ 104,000 $ 310,000 Estimated Beginning Fund Balance 200,471 (139,029) (497,529) (371,029) (267,029) Projects Carried Forward from Prior Years Estfmated Ending Fund Ba/ance $ (139,029) $ (497,529) $ (371,029) $ (267,029) $ 42,971 2 -4 Table VI CIP 2016-2020 STREET IMPROVEMENT FUND Funding Sources and Expenditure Projections 2016 2017 2018 2019 2020 Unfunded Funding Sources Municipal State Aid-State Aid Routes $ 317,400 $ 317,400 $ 317,400 $ 317,400 $ 317,400 Municipal State Aid-Local Routes 369,400 369,400 369,400 369,400 369,400 Federal Highway Funds 150,000 - 2,000,000 - - Special Assessments 600,000 560,000 580,000 580,000 580,000 Intereston Investments 20,000 19,000 17,800 13,800 11,600 Tofal Funding Sources a 1,456,800 $ 1,265,800 $ 3,284,600 a 1,280,600 $ 1,278,400 Expenditures �� Street Rehabilitation Program $ 800,000 $ 770,000 $ 800,000 $ 800,000 $ 800,000 Street Sealing Program(Chip Sealing) 235,000 235,000 245,000 245,000 250,000 SVeet Sealing Program(Crack Sealing) 35,000 35,000 35,000 35,000 35,000 Trail/Walk Upgrades 100,000 100,000 100,000 100,000 100,000 West Moore Lake Ped&Bike Improvements - - 500,000 - - SVeet Lighting Upgrade/Retrofit 90,000 90,000 - - - Traffic Signal Maintenance/Retrofit 20,000 20,000 180,000 180,000 20,000 Capital Signage Replacements - 15,000 15,000 15,000 - 69th Avenue Railroad Crossing - - - - - Traffic Safety Improvement Projects 30,000 30,000 1,722,000 30,000 30,000 Main SVeet Pedestrian Bridge Project 150,000 - - - - 57th Avenue BNSF RR Bridge - - - - - Transfer to the General Fund(Staff Allocation) 94,400 90,900 87,800 98,200 70,400 Tota/Expendifures S 1,554,400 $ 1,385,900 S 3,684,800 $ 1,503,200 $ 1,305,400 Surplus(deficiency)of funding sources over(under)expenditures $ (97,600) $ (120,100) $ (400,200) $ (222,600) $ (27,000) ! Estimated Beginning Fund Balance 1,998,749 1,901,149 1,781,049 1,380,849 1,158,249 Estimated Ending Fund Balance S 1,901,149 $ 1,781,049 a 1,380,849 � 1,158,249 a 1,131,249 2-6 ' Table VIII CIP 2016-2020 WATER UTILITY FUND Funding Sources and Expenditure Projections 2016 2017 2018 2019 2020 Unfunded Funding Sources Water Sales $ 3,017,723 $ 3,468,856 $ 3,572,594 $ 3,679,490 $ 3,789,563 Interest on Investments 44,000 44,000 44,000 44,000 44,000 Bond Proceeds 4,372,400 - 2,905,000 - - Mtenna Lease Fees 35,000 35,000 35,000 35,000 35,000 Misceilaneous Income 140,600 140,600 140,600 140,600 140,600 Total Funding Sources S 7,609,7Y3 � 3,688,456 a 6,697,194 S 3,899,090 ; 4,009,163 Expenditures Non-Ca�ital Exoenditures Operating Expenses(Less Depreciation) $ 2,123,846 $ 2,166,323 $ 2,209,650 $ 2,253,843 $ 2,298,919 Debt Service 714,699 1,088,930 1,092,086 1,094,011 1,119,648 Subtotal Non-capital Expenditures $ 2,838,545 $ 3,255,253 $ 3,301,736 $ 3,347,854 $ 3,418,567 Caaital Exoenditures Distribution System Reconstruction $ 500,000 $ 500,000 $ 300,000 $ 400,0�0 $ 500,000 Hydrant Repairs 20,000 20,000 20,000 20,000 20,000 Well Updates 180,000 40,000 190,000 - 200,000 Water Meter Replacement-AMR System 600,000 720,000 10,000 10,000 10,000 Well House Building Repairs 40,000 20,000 40,000 20,000 40,000 Distribution System Interconnection - - 500,000 - - 600,000 Fleet VehiGes - 35,000 60,000 - - Variable Frequency Drives 35,000 - 35,000 - 35,000 Chem Feed&Storage Sys Upgrade at Gommons 165,QQQ - - - ' Treatment Plant Retrofits - 370,000 - 500,000 - Transmission System Reconstruction - - 800,000 - - Storage Building - - - - - 350,000 Well 13 Analysis&Availability 20,000 - - - ' SubtotalCapitaiExpenditures $ 1,560,000 $ 1,705,000 $ 1,955,000 $ 950,000 $ 805,000 $ 950,000 Total Expenditures S 4,398,545 ; 4,960,253 S 5,256,736 a 4,297,854 a 4,223,567 Surplus(deficiency)of funding sources over(under)expenditures $ 3,211,178 $ (1,271,797) $ 1,440,458 $ (398,764) $ (214,404) Estimated Beginning Cash Reserve 637,613 3,848,791 2,576,994 4,017,452 3,618,688 Projects Carried Forward from Prior Years - - ' ' - � Estlmated Ending Cash Reserve a 8,�,�91 $ 2,576,994 3 4,017,452 S 3,618,688 S 3,404,284 2-8 Table X � CIP 2016-2020 LIQUOR FUND Funding Sources and Expenditure Projections 2016 2017 2018 2019 2020 Unfunded Funding Sources Liquor Sales(3%Growth) $ 5,907,800 $ 6,203,200 $ 6,513,400 $ 6,839,100 $ 7,181,100 Interest on Investments - - - - - Miscellaneous Income - - - - - Total Funding Sources a 5,907,800 $ 6,203,200 $ 6,513,400 $ 6,839,100 a 7,181,100 Expenditures Non-Caoital Exoenditures Cost of Sales(24%Gross Profit Target) $ 4,489,900 $ 4,714,400 $ 4,950,200 $ 5,197,700 $ 5,457,600 Operating Expenses(Less Depreciation) 1,013,100 1,033,400 1,054,100 1,075,200 1,096,700 Transfers 338,600 338,600 338,600 338,600 338,600 Capital OuUay-Other Subtotal Non-capital Expenditures $ 5,841,600 $ 6,086,400 $ 6,342,900 $ 6,611,500 $ 6,892,900 Ca�ital Exaenditures Breakroom Addition to Fridley Market $ - $ 25,000 $ - $ - $ - Highway 65 Store Remodel/Feasibility 400,000 - - - - 3rd Store Location - - - - - 900,000 Subtotal Capital Expenditures $ 400,000 $ 25,000 $ - $ - $ - $ 900,000 Total Expenditures a 6,241,600 $ 6,111,400 $ 6,342,900 S 6,611,500 $ 6,892,900 Surplus(deficiency)of funding sources over(under)expenditures $ (333,800) $ 91,800 $ 170,500 $ 227,600 $ 288,200 Estimated Beginning Cash Reserve 39,461 (294,339) (202,539) (32,039) 195,561 Estimated Ending Cash Reserve $ (294,339) $ (202,539) � (32,039) a 195,561 $ 483,761 2- 10